Far East report: Tuesday

JAPANESE shares continued to flounder today after leaked details of Wednesday's widely-anticipated anti-deflation package indicated there would be no rescue plans for the battered banks.

Other Asian markets were buoyed by overnight gains on Wall Street and Nasdaq as stronger economic data suggested that the US economy was recovering faster than expected. Bumper home sales figures raised expectations in Asia that US consumers will buy more and boost demand for Asian exports.

This provided little comfort to investors in Tokyo, where attention is focused on the proposed strategy for reflating the ailing economy. Shares fell for the second day running, and the Nikkei 225 Average lost 93.84 points to close at 10,202.63.

Banks led the losers and Mizuho Holdings, the world's largest bank, fell 3.5%, while other banks connected to the struggling Daeie retail giant fell on reports that the government is pressing banks to continue supporting the bankrupt company.

The damage inflicted on the Nikkei by bank shares was partly repaired by mobile phones giant NTT Docomo, today's largest traded share by value, which added almost 2% after the US Qualcomm group reported rising demand for cellphone chips.

In Hong Kong, gains by exporters and locally-quoted mainland cellphone groups lifted the Hang Seng index by 51.11 points to 10,547.13, although trading was quiet ahead of a key policy paper on new taxation on Friday. This is expected to widen the territory's revenue base, and shares in developers were hit by expectations of higher property taxes. The brighter US economic outlook boosted stock in HSBC Holdings after a week of falls.

A surge in technology stocks took South Korea's Kospi index firmly over the 800 mark, with a rise of 9.66 points to 801.14. Strikes that threaten to cripple railways and power stations failed to deter buyers of chipmakers, and Samsung Electronics led the way with a 3% gain. Prospects of better car sales in the US boosted Hyundai Motors, although its workers are also threatening to down tools.

Taiwan stocks failed to hold on to the best of the day's gains. The Weighted Average index rose 10.92 points to 5,499.79.

Sydney stocks followed Wall Street's lead, but gains were limited by warnings that the market has reached sensible valuations, and sentiment was not helped by news of a 47% slide in the profits of resource giant WMC. Although the mining company's stock slipped sharply, other miners held up well on longer term earnings considerations, and with News Corporation stock up a further 2.2%, the All Ordinaries index added 12.2 points to close at 3380.1.

Singapore's technology stocks responded strongly to Nasdaq's jump and the Straits Times index put on 14.73 points to 1,682.40.

Malaysian stocks staged a brief recovery after a week of falls. The Kuala Lumpur Composite index rallied only to end 0.22 down at 701.09, but in Indonesia the Jakarta Composite index fell 0.628 at 448.688. Thailand's markets were closed for a public holiday.